Qatar

Money and Banking

Employees and clients at one of Qatar's numerous
commercial banksCourtesy Qatar Today

The Indian rupee was the principal currency until 1959,
when
the government replaced it with a special gulf rupee in an
effort
to halt gold smuggling into India. In 1966 Qatar and
Dubayy
jointly established a currency board to issue a
Qatar-Dubayy
riyal. In 1973 Qatar introduced its own riyal, which was
pegged
to the International Monetary Fund's
(IMF--see Glossary)
special drawing rights
(SDR--see Glossary).
The exchange rate is tied to
the United States dollar at a rate of QR3.64 per US$1.00.

The Qatar Monetary Agency (QMA), established in 1973,
has
most of the traditional powers and prerogatives of a
central
bank. The QMA regulates banking, credit, and finances;
issues
currency; and manages the foreign reserves necessary to
support
the Qatari riyal. Unlike many central banks, the agency
shares
control over the country's reserves with what was in 1973
the
Ministry of Finance and Petroleum. QMA does not act as the
state's banker, which is the preserve of the Qatar
National Bank
(QNB).

QMA's long-time governor, Majid Muhammad al Majid as
Saad,
was replaced in January 1990 by Abd Allah Khalid al
Attiyah, who
had been general manager of QNB. The position of governor
was
upgraded to ministerial level, signaling a more assertive
future
role for QMA in the country's banking sector.

Banks give loans at rates between 7 and 9 percent, and
they
pay 7 percent on deposits. About fifteen local and foreign
banks
operate in Qatar. Two banks--Qatar Islamic Bank, licensed
in
1989, and Qatar International Islamic Bank, licensed in
1990--
reflect a trend toward Islamic banking that started in
Saudi
Arabia.

Banking in the gulf has been vulnerable to the shaky
regional
security situation. As a result of the Iraqi invasion of
Kuwait,
banks in Qatar lost an estimated 15 to 30 percent of
deposits in
late 1990.